Yes, Katz makes his money, but this deal is too good for Edmonton and northern Alberta to reject.

There’s a single reason for Premier Ed Stelmach and the province to refuse to provide $100 million in funding for Edmonton’s new downtown arena.
But there are many far more compelling and convincing reasons that should push Stelmach to come through.
Stelmach is open to hearing more on Mayor Stephen Mandel’s pitch for the project later this month, but the Premier didn’t sound too positive on Wednesday. “There won’t be any direct dollars going to the arena,” he told reporters. “It’s a private sector business.”
Of course, Stelmach is right to be wary of funding a project where a private businessman, Daryl Katz, is set to benefit.
But that’s just one issue. The bigger issue — as it is when any private business partners up with the government — is whether the public gets fair value in return.

In this case, numerous factors should guide Stelmach and his successor: a new arena is needed to keep the NHL in Edmonton; a massive public investment in fixing up Rexall Place makes little sense; the proposed downtown project enjoys popular support; it will provide a huge benefit to Edmonton’s neglected downtown; it is normal for the government to help build this kind of infrastructure; it’s a fair deal by NHL standards; and, finally, a $100 million investment is much less than other provincial governments in Quebec and Manitoba are now set to pay for NHL arenas.

It’s no reach to suggest most Edmontonians — other than a vocal minority such as the few handfuls that showed up at the recent anti-arena protest at city hall — want Stelmach to support this project.
The vast majority of almost 30,000 responses to the city’s online questionnaire last fall supported the project. This finding was validated by a scientific phone survey of 800 Edmontonians, where people again made it clear they want a better downtown, they believe a downtown arena will help, and they are willing to accept reasonable public financing. Edmonton’s city council is now firmly on board for hammering out a deal here.
There’s certainly nothing unusual about government involvement in such a project. The province has helped fund all kinds of facilities where private operators have made millions, as Bono and the Edge can attest after their recent show at Commonwealth Stadium, built entirely with public money.
The same goes for every single professional athlete or musician who has performed at Rexall Place, built entirely with public money.
Yet another example of the province supporting a private sector entertainment/sports venture is horse racing, an activity that enjoys far less popularity than Oilers hockey, Eskimo football games and U2 rock concerts.
In the past 10 years, according to Horse Racing Alberta annual reports, the Alberta government has handed over more than $240 million dollars in slot machine money to that same organization, with much of that money used to fund prize purses for jockeys and owners.
So private business in a now obscure and elitist sport like horse racing can get tens of millions in government subsidy each year, but there’s nothing for this city’s main arena? It makes no sense, especially when considering return on investment.
Tax dollars are sure to flow to all levels of government from a downtown arena district, says Ken Cantor, Qualico’s commercial project manager.
Qualico just built Edmonton’s newest skyscraper, the massive, 28-storey Epcor Tower on 101 street, right across from the proposed arena site. Cantor has firm plans to build an additional 70,000 to 100,000 square feet of adjoining retail space, but will only proceed if the arena does, too.
If it doesn’t, Qualico might well invest elsewhere, Cantor says. “We have investment opportunities which are available to us in Winnipeg, which is our head office, in Calgary or Vancouver or Phoenix or Austin, Texas … If there are better investment opportunities elsewhere, that’s where the capital will go.”
So Qualico’s extra downtown land, which it purchased in 1999, could sit vacant for another decade, Cantor says. The city would be giving up as much as $20 million in lost property taxes from this one lost project.
In total, Cantor estimates development around a new arena could bring in as much as $180 million in property taxes in the first 10 years
As for Daryl Katz, he’s getting no easy ride. He’s investing $225 million through a direct $100 million investment and a $125 million ticket tax on Oilers fans and concert goers. That amounts to half of the $450 million project. We can all wish his share was much more, just as Katz wishes it was much less.
But a 50/50 split puts plenty of Katz’s skin in this game and is also in-line with the average public/private split in the NHL on arena projects.
Katz will make a return on his investment, but not on the surrounding properties held by others and taxed by others, Cantor says. “All the spinoff accrues to the city and the province, it doesn’t accrue to Daryl.”
It’s worth noting how much the provinces of Manitoba and Quebec are willing to pay for their arena projects. Quebec’s Jean Charest has committed to giving $200 million to build a new arena in Quebec City.
The city of Winnipeg and the province of Manitoba’s initial investment in the MTS Centre, the new home of the Jets, will amount to $165 million over 20 years when you add up tax breaks and rebates, VLT revenue, and a $40 million upfront investment, reports Colin Craig of the Canadian Taxpayer’s Federation.
In addition, Premier Greg Selinger just announced that as much as $4 million more per year will be reallocated from VLTs to pay off the arena’s mortgage, as much as $80 million more in total.
That’s $5.5 million each year of government gambling money for the MTS Centre. Why not the province do the same here? Or do something else that is reasonable to close this deal.
It’s time for the province to step up on the arena project for Edmontonians, for northern Albertans and for the downtown of Alberta’s capital city.

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